NEW YORK: US natural gas futures slid about 3% to a one-week low on Tuesday on forecasts for less demand over the next two weeks than previously expected.
Front-month gas futures for July delivery fell 22.9 cents, or 2.6%, to $8.498 per million British thermal units (mmBtu) at 9:42 a.m. EDT (1342 GMT), putting the contract on track for its lowest close since May 20.
In May, the contract was up about 17%, putting it up for a third month in a row for the first time since September 2021.
US gas futures were up about 127% so far this year as much higher prices in Europe and Asia keep demand for US liquefied natural gas (LNG) exports strong, especially since Russia’s Feb. 24 invasion of Ukraine stoked fears Moscow might cut gas supplies to Europe.
Gas was trading around $29 per mmBtu in Europe and $23 in Asia.
US futures continue to lag far behind global prices because the United States is the world’s top producer with all the gas it needs for domestic use, while capacity constraints inhibit additional LNG exports.
Data provider Refinitiv said average gas output in the US Lower 48 states climbed to 95.0 billion cubic feet per day (bcfd) so far in May from 94.5 bcfd in April. That compares with a monthly record of 96.1 bcfd in November 2021.
Refinitiv projected average US gas demand, including exports, would rise from 86.0 bcfd this week to 86.9 bcfd next week. Those forecasts were lower than Refinitiv’s outlook on Friday before the long US Memorial Day holiday weekend.
The average amount of gas flowing to US LNG export plants rose to 12.5 bcfd so far in May from 12.2 bcfd in April. That compares with a monthly record of 12.9 bcfd in March. The United States can turn about 13.6 bcfd of gas into LNG.
The United States, which will not be able to produce much more LNG soon, has worked with allies to divert exports from elsewhere to Europe to help European Union countries and others break dependence on Russian gas after Russia’s invasion of Ukraine.
Russia boosted exports to Europe to 7.5 bcfd on Monday from 7.4 bcfd on Sunday on the three mainlines into Germany: North Stream 1 (Russia-Germany), Yamal (Russia-Belarus-Poland-Germany) and the Russia-Ukraine-Slovakia-Czech Republic-Germany route. That compares with an average of 11.9 bcfd in May 2021.
Gas stockpiles in Northwest Europe - Belgium, France, Germany and the Netherlands - were about 10% below the five-year (2017-2021) average for this time of year, down from 39% below the five-year norm in mid-March, according to Refinitiv. Storage was currently about 43% of full capacity.
That is healthier than US inventories, which were around 15% below their five-year norm.